Five years of oil; Jubilee, GNPC yet to make real progress

According to the African Center for Energy Policy ACEP, how much oil is produced from the Jubilee Fields is still measured by a dip stick five years into production.


This is a transcript of a debate which took place at a citizen’s conversation on five years of oil in Ghana at Ramadan Hotel in Accra between the African Center for Energy Policy ACEP, the Integrated Social Development Center ISODEC, Natural Resource Governance Institute NRGI, the Kasa Platform and the Petroleum Commission PC, organised by the Civil Society Platform on Oil and Gas.

According to the African Center for Energy Policy ACEP, how much oil is produced from the Jubilee Fields is still measured by a dip stick five years into production.

Deputy Executive Director -ACEP, Benjamin Boakye: …we have only one meter. At some point it broke down and we were using dip stick to measure how much oil we were producing and that has been the trend.

We are only hoping that with the new FPSO we have learnt our lesson because what Tullow said was that, they did not factor parallel metering in the FPSO [FPSO Kwame Nkrumah] and therefore they couldn’t allow that to happen when government decided to procure their own meters.


So now we only have Tullow giving us the data which we check when it is our time to lift [our portion of how much is produced for sale], we go there to lift. So that is the situation.

Dr. Steve Asare Manteaw, Campaign Coordinator-ISODEC: Well, I think some clarity has to be made here. The Ghana National Petroleum Commission GNPC is a partner, and so is involved in the production processes.

In these ways we are also able to cross check. I need to put on record that it is the same practice in the mining sector. At the mines, we station a custom officer whose duty is to observe the smelting of the [Gold] bars and all that; and then enter the production and certification declaration and all that. (Benjamin Boakye interjects)

Benjamin Boakye: But Doc, (referring to Dr. Manteaw) I think in an era of technology where electronic seals don’t take so much space, it really makes sense to have that, you know, extra robust system to be able to track. Ghana Revenue Authority GRA staff, one at a time.

So the point between one of the staff transiting from the [Jubilee Fields] platform 60km to Takoradi before they pick on the other person, who is there?


Dr. Manteaw: I think they swap.

Benjamin Boakye: They swap and so they have one space. They bring you and take the other on.

Dr. Manteaw: They don’t take one away. They bring you to change the person at post, so there is no gap.

Benjamin Boakye: But even one person at post, how vigilant can you be throughout your duration on the platform?

Dr. Manteaw: No, I’m not discounting the need for that. Let me tell you. Even when it comes to tax computations, how much tax the companies have to pay, we depend on them, in both the [Gold] mining and the oil sector. That has been the practice.


Benjamin Boakye: Even this year [2015], the companies are saying that they cannot pay so much tax because oil prices collapsed. I mean, who has found outwhether they hedged or they didn’t? And we do know that they have [a] long term contract.

Samuel Bekoe, Africa Regional Associate NRGI: They hedged!

Benjamin Boakye: They hedged. So they don’t pay the right taxes because we do not have the capacity to assess and analyze what they do! These are some of the challenges we need to take [a] critical look at.

Samuel Bekoe: Just quick information on that. They hedge. The information is available in their company reports. Tullow, Kosmos all of them hedged.

I think Tullow hedged 70 percent and Kosmos hedged similar percentage of their oil at a price between 70 and 80 [dollars per barrel].


So they are still selling some percentage of their oil at that price. But the issue is, if prices are high and Tullow had hedged at 80 and now prices are at 150 [dollars per barrel], will the government still take taxes at 150 or 80?

Government might have taken taxes at 150 so that’s the question. Now they are gaining but they do not have to pay taxes at that price based on the contract though. They may have to pay tax at the current world market price. So that is the positive and negative sides.

Dr. Manteaw: [It] is a policy decision that we need to make. It’s happening in the [Gold] mining sector in the compilation of the data for the Ghana Extractive Industry Transparency Initiative GHEITI 2013. Adamus Resources (a gold Mining Company in Ellembelle W/Region) actually provided hedged figures okay.

They hedged and lost and they wanted to claim indemnity for taxes and we [government] said no, hedging is your business. We are going to tax you on what we know as the going rate. And so [it] is a decision we made.

We can stick to what we have and if they go to hedge and lose, is their business and if they go and win too, is their business. We just tax them based on the going prices of the commodity.


Kwame Mensah-The Kasa Platform: But can’t we have a system such as electronic meters in place where the industry players can sit anywhere and just log in to know in real time how much oil is been produced at any given point in time?

Bishop Akolgo: Member of Petroleum Commission Board: Since government established the commission, it has not given us the money to operate. So we have to rely on levies to survive.

Now if you have a young daughter who goes out and comes back with [a] laptop and mobile phone, shouldn’t you be asking of where she gets all that from? Otherwise the next thing she brings will be something that you will never like. [Participants burst into laughter].

It’s not in our interest for the regulator to depend on the industry for funding. If we [Petroleum Commission] don’t keep our eyes open, Ghana will lose a lot of money.  And do not think that GNPC alone can be our eyes and ears. A company is still a company even though it’s our national oil company, it’s still a business. In terms of monitoring, the petroleum commission does not have the resources to do that.

To go up the FPSO, you will need a helicopter. And to get even to the platform you need to be insured by an insurance company. Not anybody can walk in there. So when people suggest that maybe we should put a civil society person in there to check how much oil is been produced [on the FPSO] and somebody also suggested that maybe we should computerize it so that maybe if I sit here I can log in and see production.


The ideal is to have electronic meters and that way GNPC, Petroleum Commission, Ministry of Petroleum and Tullow Headquarters can see the production level. But we haven’t gotten there yet. Last year this time around [in October 2014] we were training our own people on how to man the meters.

That has been done, the meters have been installed. But we have to go to the point where we have computerized the meters. So now if you go to GNPC they would have some data but is maybe half a day behind the actual or what is happening on the FPSO. If you go to the Petroleum Commission, they may be three or four hours behind of what the figures are on the FPSO.

Lifting is more accurate, but actual production, we haven’t gotten to the point where we can tell you by the minute that this is how much have actually been pumped out.

And the metering is done in such a way that you have it not at just one point. There is another way that you can use to crosscheck; sort of a standby meter. So [it] is possible to do that.


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